AB 51 Update: Preliminary Injunction Granted

On Friday January 31, 2020, Judge Kimberly Mueller of the Eastern District of California granted a preliminary injunction blocking the enforcement of California Assembly Bill 51 (AB 51) to the extent it applies to arbitration agreements covered by the Federal Arbitration Act, 9 U.S.C. §§ 1-16. AB 51 makes it unlawful to require workers or job applicants to enter into mandatory arbitration agreements covering claims under the California Fair Employment and Housing Act or the California Labor Code as a condition of employment or to obtain employment benefits.

As we previously reported here, on January 10, 2020, Judge Mueller heard oral arguments on plaintiffs’ motion to preliminary enjoin the enforcement of AB 51. At the hearing, Judge Mueller requested that each party file supplemental briefs addressing the issue of standing and severability, and also ordered that the temporary restraining order previously imposed remain in effect until January 31, 2020.

Now, after reviewing the relevant briefings, Judge Mueller has issued a minute order granting in full plaintiffs’ motion for a preliminary injunction. The minute order states that in the coming days, the Court will explain its reasoning in a detailed order.

This decision is an initial victory for California employers and California employees who wish to resolve any disputes in the streamlined and efficient manner that arbitration provides. To the extent other states introduce legislation similar to AB 51, this decision is also good news for non-California employers. We will provide further updates once Judge Mueller issues her detailed minute order so stay tuned for further analysis on this issue.